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Canadian Patent Term Extension is Coming (UPDATED CETA Announcement)

October 29, 2013

Canada-Europe Free Trade Deal Gives Brand Name Pharmaceutical Companies a Shot in the Arm

Original article October 18, 2013; updated October 29, 2013

Canada and Europe announced an agreement in principle on a Comprehensive Economic and Trade Agreement (“CETA”). Its most significant aspect is the potential increase of some drug patent terms by up to 2 years.

CETA was the product of several years of negotiations. It is a wide-ranging trade agreement covering diverse topics such as foreign ownership and investments, access to public procurement contracts, automobiles, food (e.g. beef and dairy products) and agriculture. Pharmaceuticals were also a prominent part of the discussion. The agreement was negotiated in secret. Europe was reportedly pressuring Canada to strengthen exclusivities for brand name drugs. Leaked drafts of the agreement showed that the main pharmaceutical intellectual property issues on the table were: i) providing patent term extension, ii) longer period of data exclusivity protection for brand name drugs to keep generics off the market, and iii) improving the right of pharmaceutical companies to appeal a loss in certain specialized pharmaceutical patent litigation cases called “NOC Proceedings”.

Patents give companies the exclusive right to use an invention for a time period, typically up to 20 years from the patent filing date. Patent term extension will be provided for up to 2 years in the case of government regulatory delays in approving the drug. This is a similar concept as US patent term extension for FDA regulatory delays. This extension will be available only to drugs entering the market after the new rules come into effect. The federal government stated that it will address drug cost impacts that the extension may cause for provincial governments. CETA will also provide an exception under the patent term extension for generic drugs to be exported.

There will also be improved brand name company rights to appeal NOC Proceeding court decisions. An NOC Proceeding is a court hearing between a brand name company and generic company that reviews patent issues to determine whether a generic company can get its marketing authorization. Since it does not determine patent validity or infringement with finality, an NOC Proceeding can be followed by a patent infringement or validity lawsuit. This may change because the government also stated that it intends to reduce dual litigation, where the same parties litigate the same patent more than once. This latter change appears to be separate from CETA, but it could potentially be packaged in as an additional amendment beyond the amendments to implement CETA into Canadian law. There is no further information currently available on the nature of these very significant litigation changes.

Canadian data protection for brand name drug companies was discussed in the CETA negotiations, but not changed. It will remain at 8 years, which was the Canadian government’s preference. It may now become a treaty obligation through CETA, which would mean that it is more entrenched, and the time period couldn’t be readily reduced in future without Canada being in breach of the trade agreement. During the data protection period, a generic drug company cannot get its marketing authorization by relying on the brand name company’s clinical trial data. The rationale for data protection is that brand name companies spend years and millions of dollars generating their clinical trial data -- it should then not be made immediately available for generic competitors to use for their own purposes as an inexpensive shortcut to get their approval. This data protection period allows the brand name companies an opportunity to recoup their large R&D investment and make a profit.

The effects of CETA on industry will greatly depend on the specific implementation of such laws. It will take some time for the governments to draft and finalize an agreement, likely more than a year. The next Canadian federal election is expected in 2015, so the government will aim to have the deal completed by then. CETA would be in jeopardy if it remained an agreement in principle at election time and there was a change in power.

The federal governments must then pass new laws to implement the patent provisions of CETA. It is unclear the extent to which the government would consult with Canadian stakeholders prior to bringing in new laws. Implementation of this complex trade agreement would be staged so that different portions of laws come into effect at different times. Stay tuned for more information about the timing of pharmaceutical patent changes coming into force.

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